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...risks in mature economies aren't so lethal. Instead there is potential treachery of the bottom line. Bank analysts are worried that HSBC has become overly dependent on slow-moving, mature markets, such as in Europe and the U.S.--which could slow growth. Goldman Sachs estimates HSBC's profit growth will sink to a more-than-respectable 9.8% a year from 2005 to 2007, after expanding an average of 19% a year from...
Call it the downside of getting global. In the mid-1990s, HSBC's business was based primarily in Hong Kong and Britain. Since 1998, however, the bank has completed more than 50 acquisitions, the biggest coming in the U.S., where HSBC previously had only a minor presence in the form of Marine Midland Bank, which it bought in the '80s. In 1999 HSBC acquired Republic New York Corp. for $9.7 billion. In 2003, in a move that signaled HSBC's determination to shift into higher-margin consumer businesses, HSBC paid $14.4 billion for Household International, a provider of car loans...
...result of the acquisition binge: HSBC's asset base exploded, from $472 billion in 1997 to nearly $1.5 trillion by mid-2005. The bank has a global footprint matched only by that of Citigroup, which has slightly larger assets than HSBC. HSBC has also become a very, very different bank. In 1997 nearly half its revenues came from emerging markets; today less than 20% does, according to Morgan Stanley...
Making emerging markets a bigger part of HSBC's business will probably be the primary challenge facing Green, 57, as he takes the bank's helm. A low-profile company insider who joined HSBC in 1982, Green was tapped in November to become HSBC's new chairman after the dapper and dynamic Bond retires in May. A part-time deacon, Green penned an unusual book in 1996 titled Serving God? Serving Mammon?, in which he strives to reconcile the money-hungry world of Big Business with the Christian ideal of love for humanity. "The kingdom of God can be found...
That's not to say HSBC can't compete and win. To get a head start in the virtually untapped Chinese credit-card industry, HSBC in July formed a joint venture with its partner Bank of Communications. Although the operation is 100% owned by the Chinese bank, the cards will be co-branded with HSBC, which plans to acquire a stake when regulations allow. "We always try to be the first through the door," says Yorke, HSBC's China chief. In India HSBC employs mobile marketing teams that push its services at stalls set up in shopping malls, office buildings...